2010 Abstracts
This paper reports on two high-stakes events in which a randomlyselected "luckiest" student received the opportunity to participatein a lottery consisting of equally likely outcomes of zero and the cash equivalent to one semester of tuition. The major purpose of the events was to provide students and the larger communityan opportunity to experience an event that was both significantin magnitude and undeniably random. A second purpose was to study the choice behavior of individuals facing lotteries involving stakes that, to our knowledge, were higher than any used in prior laboratory experiments. Prior to the selection of the luckiest student, all students were asked to declare the price at which they would choose the fixed dollar offer over the lottery.We studied how these reported prices changed when payoffs were hypothetical versus real and how students came up with their prices. With the second event, we conducted a full-factorial experiment that measured the effects of three factors identified during the first event (e.g., whether they were a buyer or seller).Our descriptions here of the formal and informal lessons from these events will be of interest to those involved in educational programs and in behavioral research related to decision analysis.
Strategy researchers have argued that heterogeneity in firms’ practices and profitability within and across industries may derive from industry-level differences in the extent of interdependencies among firms’ activities. Theoretical models have clarified how and why differences in the extent of the interdependencies faced by firms across industries may affect the distributions of firm profits, but the specific predictions from these models have not been empirically tested. In this paper, we present what we believe is the first large scale empirical analysis linking differences in the extent of interdependencies across industries to differences in the distribution of firm profits within and across those industries. We use survey data to measure interdependencies systematically across a wide number of industries, thus addressing the primary obstacle to incorporating interdependencies in larger scale empirical work, and find evidence consistent with the theoretical predictions: average profitability is highest in industries with moderate levels of interdependency; the dispersion of profits among firms is higher in industries with more extensive interdependencies; and industries with more extensive interdependencies have a more positively skewed performance distribution.We find that the effect of interdependencies on average industry profitability is similar in scale to the effect of patent protection and industry growth rates, placing interdependency squarely among the strategy field’s central concepts. Copyright 2009 John Wiley & Sons, Ltd.
We examine how the status and speech style of experts impacts how they are perceived and their level of influence. In our experiment we manipulate whether high-status and low-status experts share their expert knowledge using a more or less powerful style of speech, and find that experts are more liked, more influential, and engender more confidence when they express themselves in a manner congruent with their status (i.e., high status with powerful speech and low status with powerless speech). We further show that liking acts as a mediator between congruence and influence. This study suggests that experts with low-status characteristics who want to be influential should ensure that their expertise, a marker of high status, is known to the listener before engaging in powerful styles of speech.
In this paper we report the results of two experimental studies designed to test how demographic characteristics affect outsiders' assessments of a firm's top managers. We draw on theories of evaluation and status characteristics to examine the interactive effects of managers' racial characteristics and educational prestige on external perceptions. In the first study, we find that top executives' educational background and race affected analysts' valuation of a firm's stock. Outside analysts made the highest stock price projections for firms led by white executives who had highly prestigious educational backgrounds but made the lowest valuations for firms led by African Americans with the same prestigious education. We posit that the moderating effect of executives' racial characteristics stems from outsiders' assumptions that African American managers received preferential treatment in the admissions process for high prestige universities. In the second study, we find that when we explicitly removed the possibility of preferential selection, analysts gave the same stock valuation to firms led by white and African American executives with high educational prestige. We discuss the implications of these findings for theory and management.
The authors investigate consumer, firm, and policy implications of the fast-food marketing practice of bundling a soft drink and French fries with an entrée (i.e., 'the combo meal') and then offering these three items at a discount. The authors first demonstrate that this practice increases the customer's perceived value of the bundled items. In addition to the traditional economic rationale for consumer purchases of bundles, the authors find that consumers view the bundle as having value beyond the notion of a discount or the perception of the items as complements. The authors attribute this increased value to both the reduction in ordering costs and the promotional effects associated with purchasing the bundle. They also find that consumers become more price sensitive to all goods offered when bundled goods are offered. The authors use this knowledge to determine the impact of several public policy strategies that are focused on reducing consumers' caloric intake. They demonstrate that proposed taxation on soft drinks has little effect on reducing overall caloric consumption when a bundle is present. They also show that it is possible to maintain profits while reducing caloric consumption by at least 10% if the industry as a whole reduces the portion sizes of drinks and fries associated with the combo meals.
We examined how the minority’s perceived (i.e., not real) expertise affects group discussion and performance. In two experiments, participants were randomly assigned to interacting groups in which the minority faction was perceived as either expert or not. Groups performed a decision task that involved solving a murder mystery. Both experiments showed that minorities perceived as expert (vs. not perceived as expert) made majority individuals acquire more accurate private judgments after group discussion, although the public group decision was not more accurate. In parallel, perceived expertise made minority members change their own judgments less. Experiment 1 also showed that minorities’ questioning behaviors mediated the effect of minorities’ perceived expertise on majority members’ private accuracy. Experiment 2 further showed that majority members’ deeper processing was also a mediator. Thus, minorities with perceived expertise serve as a catalyst, increasing the quality of majority members’ cognitions, but not their own.